TOKYO (Reuters) - Japan's Defense ministry said Mitsubishi Electric Corp (6503.T), the country's second largest military contractor, had overcharged it by 31.7 billion yen ($375.6 million) for equipment and services over 11 years.

The ministry halted all business with the company in January after the firm admitted to inflating bills related to Defense projects such as surface-to-air missiles ordered in 2009 as well as agencies involved in the space program, such as the Japan Aerospace Exploration Agency (JAXA).

The ministry on Friday said it would remove the suspension once the overcharged amount was refunded.

Mitsubishi Electric, which specializes in satellite communication equipment and ranks second after Mitsubishi Heavy Industries Ltd (7011.T) as a major Defense contractor in Japan, has also been barred from doing business with other government agencies including the Cabinet Satellite Intelligence Centre.

JAXA said on Friday Mitsubishi Electric had overcharged the agency by 6.2 billion yen since 1994. The agency said it would order the firm to return the amount as well as an additional fine.

Sales in the Mitsubishi Electric's information and communication systems business, home to the division that designs and builds satellites, accounted for 14 percent of its total 3.6 trillion yen revenue last fiscal year.

In July, the company refunded 26 million yen to the treasury for overcharging the Ministry of Internal Affairs and Communications for research projects related to communication satellites.

The Defense ministry also said Sumitomo Heavy Industries Ltd (6302.T) overcharged it by 2.4 billion yen.

Shares in Mitsubishi Electric ended down 2.2 percent at 744 yen ahead of the announcement, compared to a 1 percent decline on Tokyo's benchmark Nikkei average .N225. Sumitomo Heavy shares also ended down 2.2 percent.